A credit card deal can trigger rewards
An agreement reached in a 20-year alliance between credit card issuers and retailers could change the way you accumulate loyalty points every time you swipe your card at a sales terminal.
The deal, first reported last week by Wall Street Journal And to be allowed by the Court of the Eastern District of New York, the title comes from the side brought in 2005 by a group of merchants who rejected the requirements set for it by payment networks like visa and mastercard.
These networks charge merchants a fee for the transactions they process, part of which they pay to the card-issuing banks. How much does a merchant charge for each swipe that varies based on the amount and type of transaction (in-person transactions are handled differently than online or other card “), with card rates, with averages ranging between about 1% and 3%.
This last point is at the heart of the disagreement. As a general rule, the more generous the Picks are to card merchants, the more they have to pay per swipe.
The number of people using rewards cards has skyrocketed since the credit card scene was revived in the years following the Great Recession. The Fendar Financial Protection Bureau says that as of 2019, more than 90% of credit card spending was on Revuzo Cards, up from 82% in 2007. This means that the Retailers tab is processing.
An agreement between issuers and sellers would reduce the amount of money sellers would have to pay for several years, on average, by about 0.1 percentage point A book to record the events of the day. Although a small number on its face, this can be a victory for large retail chains that handle billions of dollars in sales. By 2023, banks that issue Visa and Mastercard credit cards alone will receive $72 billion in transaction fees.
Stores can pick and choose which cards they accept
The agreement may have made waves, but due to the burning provision the current law reserved for payment networks. Historically, they have required merchants to take a comprehensive approach to accepting their cards: If a store accepts visa, for example, that means it must accept just Visa cards.
Under the new Accort, merchants would have more flexibility to accept some cards and reject others. Stores will also have more flexibility when it comes to adding surcharges if customers want to pay with certain credit cards. (Some small businesses already do this, as do some organizations, such as colleges and federal tax departments.)
There is also legislation being considered that has the power to support the credit card situation. The Bipartisan Credit Card Competition Act, first introduced in 2022, would remove the requirement that if a customer pays for a purchase with, say, a visa card, the transaction would have to be processed through the visa network.
Although the mechanics are different from the agreement recently issued by merchants and networks, both structures aim to give merchants more flexibility in accepting and accepting credit cards. It can affect how many banks receive money from swiping money.
They can also deal with potentially confusing information at the cash register. “It makes you wonder, are there many stores that will say, ‘You can’t use these cards’?” Says consumer finance expert Andrea Direch.
He says that retailers who might use a “carrot” instead of a “sticky” way to Coax customers to use their favorite cards. For example, he says, a store could offer an extra discount to customers who use a preferred card — perhaps a combined one. “I think there will be some creative strategies,” Forhoch said.
Shops must go tighrope, however; They don’t want to allow customers to re-customer or do anything to discourage customers from walking away from buying or going to the competition instead. As a result, the consumer Upshot can be very surprising.
In fact, credit expert John Ulzheimer says that customers may not be cheap. “Ultimately, the seller doesn’t want an unpleasant experience for their customers,” he said.
Allowing merchants to choose their processing network”[e] Who sponsors the card with the money that gets the money, “said Stanielle Zanzalari, assistant professor of economics at Shethani Hall University, while there is no guarantee of the ticket prices that will pass.
Credit card rewards can get Stingier
Since the banks use some of the money they get from exchange fees to finance their reward programs, another result of the release of the agreement gives the Carks, either the benefits of getting flights or by making their reward structure less generous.
“The credit card companies make all this money from swipe fees, [so] There’s definitely an opportunity to moderate the rewards card structure,” Forhoch said.
But Ulzheimer says there may be some reluctance on the part of banks to rock the boat. History provides a military legend: When new rules were introduced around payment cards after the Great Depression, regulators almost as much as the money that was usually collected through debit card transactions, later increased to 24 cents) for transactions between debit cards.
This may sound like small change, but the banks received the full amount of these fees from these funds in 2009. In response to the change, Bank of America has announced it will be paying customers with Debit cards. Other major banks quickly followed suit, announcing a monthly fee of $3 to $5 for the use of Debit cards.
As you will know, you don’t pay a monthly fee to use your Debit card now. That’s because the bank’s customers who throw the collective are more likely to be heard on Wall Street. More than 200,000 people voted with their wallets and joined credit unions. After almost a month – and a Flood of Bad Press – Banks funded an idea that was not well received.
That’s not to say that banks haven’t found other ways to make a difference: Debit Reward programs simply disappeared, and funds for things like “account adjustments” were created.
The concept of Credit Card Swipe – Restricted changes – whether voluntary or legal – that banks issuing credit cards will find a way to make up lost profits. But according to Ulzheimer, customers will likely be looking more closely to find out how.
He says: “A dollar is a dollar, but it earns it. “The income of a bank is limited only by the wisdom of the bank.”
Instead of making sure that cardholders of Offert Changes are likely to be able to see and complain about it, “There are other, less controversial, ways to make up for the lost money,” said Ulzheimer. For example, card issuers may apply incremental tweaks to their terms and conditions – say, throw in a “Concierge” service or eliminate foreign currency transactions.
“Those structures are very confusinga woman That if you make a change in it, it might not be detected as much,” notes Ulzheimer.
Already, you’re accompanied by an ever-changing menu of reward options, such as accelerated spending categories or discounts at third-party service stores such as food apps, falling into the realm of cardholder entertainment.
Some cardholders have been motivated to get more benefits from their cards because they pay more for them today. The annual fee for some of the most powerful End End books has entered the $1,000 mark.
“As a consumer, when thinking about your rewards card, it’s really important to make sure the card you’re using offers you the highest rewards in return,” he advises. “Find out where you spend the most money and find a rewards card that fits those categories.”
More from money:
A $1,000 annual fee on Premium credit cards may soon be new
The best credit cards of 2025
Should I keep my first credit card open forever?
